Fundamentals of Statistics (5th Edition)

5th Edition

ISBN: 9780134508306

Author: Michael Sullivan III

Publisher: PEARSON

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Chapter 12.3, Problem 19AYU

CEO Performance (Refer to Problem 31 in Section 4.1) The following data represent the total compensation for 12 randomly selected chief executive officers (CEOs) and the company’s stock performance in 2013.

Company	Compensation (millions of dollars)	Stock Return (%)
Navistar International	14.53	75.43
Aviv REIT	4.09	64.01
Groupon	7.11	142.07
Inland Real Estate	1.05	32.72
Equity Lifestyles Properties	1.97	10.64
Tootsie Roll Industries	3.76	30.66
Catamaran	12.06	0.77
Packaging Corp of America	7.62	69.39
Brunswick	8.47	58.69
LKQ	4.04	55.93
Abbott Laboratories	20.87	24.28
TreeHouse Foods	6.63	32.21

Source: Data from Chicago Tribune, June 1, 2014

a. Treating compensation as the explanatory variable, x, determine the estimates of β₀ and β₁.
b. Assuming the residuals are normally distributed, test whether a linear relation exists between compensation and stock return at the α = 0.05 level of significance.
c. Assuming the residuals are normally distributed, construct a 95% confidence interval for the slope of the true least-squares regression line.
d. Based on your results to parts (b) and (c), would you recommend using the least-squares regression line to predict the stock return of a company based on the CEO’s compensation? Why? What would be a good estimate of the stock return based on the data in the table?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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Chapter 12.3, Problem 18AYU

Chapter 12.3, Problem 20AYU

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Chapter 12 Solutions

Fundamentals of Statistics (5th Edition)

Ch. 12.1 - True or False: The shape of the chi-square...Ch. 12.1 - A _____ test is an inferential procedure used to...Ch. 12.1 - Suppose there are n independent trials of an...Ch. 12.1 - What are the two requirements that must be...Ch. 12.1 - In Problems 5 and 6, determine the expected counts...Ch. 12.1 - In Problems 5 and 6, determine the expected counts...Ch. 12.1 - Prob. 7AYU Ch. 12.1 - Prob. 8AYU Ch. 12.1 - In Problems 710, determine (a) the 2 test...Ch. 12.1 - In Problems 710, determine (a) the 2 test...

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